The insurance industry in the US and Canada is entering a hard market. Premiums are increasing, almost across the board, as the large insurance companies are trying to recoup income from the rapidly rising cost of claims. Some of the hardest hit will be those in the commercial property and casualty space.
In a Wall Street Journal article, Leslie Scism writes: “Big Car, home, and business insurer Travelers posted at 41% decline in second-quarter net income, as inflation continues to drive up costs, including to repair and replace automobiles and pay for medical care of injured people.” This means that the average cost to settle a claim has gone up significantly due to multiple factors such materials (supply chain) cost and wait times.
These nationwide increases can be attributed to the rapid inflation as well as the catastrophic claims caused by Hurricane Ida, the wild fires out west, and the massive wind and hail storms that swept across the US. Scism writes (of Travelers): “Catastrophe costs increased to $746 million pretax compared to $475 million pretax in the year earlier quarter.”
Unfortunately, for the consumers and business owners, this will trickle down to the premium rates. However, this does not mean the average consumer or business owner is stuck paying the highest increases. Smaller and specialty insurance companies are becoming increasingly competitive with their rates. They are also seeking new business and are willing to expand into new market sectors. 2022/23 may be the best opportunity for businesses to seek new alternatives to their current insurance programs.
Scism, L. (2022, July 21). Inflation Hits Big Insurers’ Profits. The Wall Street Journal. Inflation Hits Big Insurers’ Profits – WSJ